Any Challenge to appointment of Arbitrator should be raised before the Arbitrator himself in the first instance

The Supreme Court has held that any challenge to the arbitrator appointed should be raised before the arbitrator himself under Section 13 of the Arbitration and Conciliation Act 1996 in the first instance and thereafter under Section 34 of the Act.

The said ruling was held in the matter of SP Singla Constructions Pvt. Ltd. Vs. State of Himachal Pradesh & Anr. (Civil Appeal Nos. 11824-11825 Of 2018), decided on 04.12.2018.

Challenge

In the present case, SP Singla Constructions Pvt. Ltd. raised a dispute and requested for the appointment of an arbitrator. The arbitrator (Superintendent Engineer) entered upon a reference on 11.11.2013. After several adjournments at the instance of the contractor, arbitration proceedings were terminated by the arbitrator under Section 25(a) of the Act.

Thereafter, the contractor (SP Singla Constructions Pvt. Ltd.) filed a petition before the Delhi High Court under Section 11(6) of the 1996 Act praying for the appointment of an independent arbitrator. The High Court dismissed the plea holding that any party is dissatisfied or aggrieved by the appointment of an arbitrator in terms of the agreement by other party/parties, his remedy would be by way of a petition under Section 13 of the Act and thereafter while challenging the award under Section 34 of the Act.

This order was assailed before the Apex court raising the issue whether in the light of the agreement between the parties in Clause (65) of the general conditions of the contract, the contractor can challenge the appointment of the Superintendent Engineer, Arbitration Circle, as an arbitrator to resolve the dispute between the parties.

Held

The High Court had placed reliance upon the judgment in Antrix Corporation Limited v. Devas Multimedia Private Limited (2014) 11 SCC 560 and held that when the Superintendent Engineer, Arbitration Circle was appointed as the Arbitrator in terms of the agreement (or arbitration clause), the provisions of sub-section (6) of Section 11 cannot be invoked again. The High Court further observed that in case, the other party is dissatisfied or aggrieved by the appointment of an arbitrator in terms of the agreement, his remedy would be by way of petition under Section 13 and thereafter while challenging the award under Section 34 of the 1996 Act.

The said observation of the Delhi High Court was confirmed by the Apex Court finally holding that petition under Section 11 would not be maintainable as the Arbitrator has been appointed as per clause (65) of the agreement and as per the provisions of law. Once, the appointment of an arbitrator is made at the instance of the government; the arbitration agreement could not have been invoked for the second time.